Showing papers on "Human capital published in 1973"

The Rise of the Western World: A New Economic History

Abstract: A radically new interpretation, offering a unified explanation for the growth of Western Europe between 900 A. D. and 1700, provides a general theoretical framework for institutional change geared to the general reader. North and Thomas seek to explain the "rise of the Western world" by illuminating the causal importance of an efficient economic organization that guarantees a wide latitude of property rights and both incentives and protection for economic growth. Although they pay homage to both Marxian and neoliberal theory, they take a theoretical middle ground that privileges the sociopolitical backdrop of economic affairs (as opposed to solely private or class-based activity) and in doing so identifies the roots of modernization as far back as the 10th Century. To justify the novelty and originality of this approach, they write that most analysts have misidentified the symptoms of modern economic growth (technological change, human capital, economies of scale) as the causes. In doing so, previous scholars have failed to answer the question "if all that is required for economic growth is investment and innovation, why have some societies missed this desirable outcome?" (2). Their answer is that some societies (England and the Netherlands) were better than others (France and Spain) at providing an efficient economic organization that could guarantee conditions favorable to per capita economic growth among a rapidly growing population.

Education in Nonmarket Production

Abstract: Since an investment in human capital yields a return through time spent in the labor market, it may also yield a return through time spent in productive activities outside the labor market. This paper explores a framework in which these "nonmarket" returns may be analyzed. The model is implemented empirically to test implications pertaining to the partial effect of formal schooling on expenditure patterns and to estimate the magnitude of the nonmarket return to an investment in education.

The Value of Children: An Economic Perspective

Abstract: It is postulated that parents respond to economic considerations in the children they bear and rear and that they equate the sacrifices and services expected in arriving at the value of children to them. Advances in economic analysis which make this analysis of population growth possible include: the theory of investment in human capital the treatment of human time in allocative decisions the household production function and a view of the family that encompasses both consumer choice and household production decisions including the bearing and rearing of children. In poorer countries children are very much capital. They require a great deal of care in the beginning and the rewards are wholly psychic but as the child becomes a teen-ager the cost is less and the rewards in the form of useful work are great. The concept of time as a factor in household production and the idea of household production itself show that a child does indeed contribute value to a home even though he is not gainfully employed. Other studies in this supplement elaborate these concepts. At the present time the therory lumps all the costs of the children at the beginning of the cycle and all the rewards at the end. It is thought that the process is a continuing one with varying values at each stage of the reproductive life cycle. Economic tools have great potential in explaining various demographic patterns. To be truly effective models will have to be developed for each stage of family life including the time childrearing days are over. Only thus will family planning personnel be able to see what results increased economic opportunity for women increased labor-saving devices and changes in contraceptive technology as well as infant mortality will have on untimate family investment in children.

Regional Differences in the Structure of Earnings

Abstract: T HERE have been a number of attempts to estimate the relationship between schooling and earnings of individuals, but the most common feature of these studies has been severe data limitation which, in turn, has dictated how the analysis could proceed. Perhaps the most serious restriction imposed by the data has been the assumption that earnings relationships are the same across the nation or, at least, across very sizable aggregations of states. This paper examines the viability of such assumptions by looking at differences in earnings functions among smaller, more homogeneous labor markets. This res-earch reveals large differences across labor markets in the returns to human capital and indicates that much of the observed difference in regional and racial earnings results from structural differences in earnings functions.

The Wealth Effect in Occupational Choice

Abstract: The purpose of this paper is to indicate regularities in the area of occupational choice using income-leisure analysis. A simple one-period model is used to examine the effect of changes in nonhuman and human wealth on the choice of an occupation. It is argued that under certainty: An increase in nonwage income will increase the propensity to choose pleasant low-paying work activities. An increase in human capital will also induce a choice of pleasant work activities if the income effect is dominant. Under conditions of uncertainty an increase in nonwage income will tend to encourage the choice of risky high-paying work activities if their monetary returns are uncertain. If the nonmonetary returns of an occupation are uncertain the propensity to choose it will tend to decrease with wealth. Finally, an increase in human capital is likely to discourage the choice of occupations with risky monetary returns.

A Human Capital Approach to the Burden of the Military Draft

Abstract: This article estimates the present value of future income differences attributable to induction for draftees with various military and educational experiences. Using these estimates, a comparison is made of the conscription tax under alternative draft schemes. The results show that: (1) certain types of draftees gain in future income because of induction, and (2) a random draft of 18-year-olds not only minimizes the human capital burden of conscription but would result in an aggregate pecuniary gain for inductees.

The Structure of Earnings in Japanese Manufacturing Industries: A Human-Capital Approach

Abstract: The aim of the paper is to explain the earnings structure in manufacturing industries in Japan mainly by differences in resources used to create and improve the skills and knowledge of the working force. The approach provides the opportunity of analyzing the effects on earnings of experience inside and outside of the firm, given educational level attained, and to inquire whether the behavior of the Japanese worker corresponds to returns to these different forms of experience. The results suggest that outside experience is quite important, and that it is substitutable, to a great extent, for inside experience. These results do raise questions about the true extent of the nenko wage system. A by-product of the paper is a calculation of the rate of return to a college education in Japan.

Differences in fertility determinants: Developed and developing countries

Abstract: This study estimates two separate fertility models for developed and underdeveloped countries to determine if they are the same. The model differs from past studies in two respects: (1) a simultaneous equation model is used, and (2) an opportunity cost of fertility is included in the fertility equation. When this more complete model of fertility is used, the sets of regression coefficients of the fertility equations of developed and developing countries prove hereroge‐neous, contrary to the conclusions of past studies. Thus, it is suggested that development planning’ in underdeveloped and developed countries might proceed differently as far as the population variable is concerned. Underdeveloped countries may find it necessary to allocate scarce capital to investment in human beings, for this seems to be a powerful tool whereby population growth can be limited. On the other hand, developed countries might find it advantageous to invest in human capital and also to encourage greater female participation in...

Size of Firm, Worker Earnings, and Human Capital: The Case of Japan

Abstract: Appraises the effect of size of enterprise on wage differentials in Japanese manufacturing. Application of the multivariate technique; Results of multivariate analysis; Causes of wage differentials. (Abstract copyright EBSCO.)

A note on the demand for enrollment in higher education

Abstract: This paper extends the basic Markov-chain, transition-proportions model by considering human capital investment behavioural variables. The demand for enrolment in higher education is expressed as a function of tuition, income and relative wages of graduates. According to the empirical results the hypothesis cannot be rejected that high school graduates are investment oriented in their decision to enrol to college.

The Quantity and Quality of Education and their Influence on Earnings: The Case of Chemical Engineers

Abstract: IN this paper is examined some of the determinants of earnings of males in a "high powered" occupation, chemical engineering. Models such as those developed here can be useful to researchers interested in earnings functions, the theory of occupational choice, economic growth and returns to investments in human capital. In addition, earnings models can be help'ful to individuals who must make promotion and salary decisions. The impact of education on earnings has received a great deal of attention in social, political and economic circles. Previous studies show that persons who obtain higher levels of education earn higher incomes. However, comparing average incomes of individuals who differ only in levels of educational attainment may overstate the influence of education since schooling and non-schooling factors other than the amount of formal schooling cause differences in individual incomes. Such factors include socio-economic background, demographic characteristics, innate ability and the quality of formal education. Emphasis in this study is on the quality of education and student ability. The author was able to find only two attempts at simultaneously estimating the impact of student ability and school quality on the earnings of persons in professional occupations.' This paper is viewed as an exploratory effort in this direction. The basic earnings functions to be estimated are described in section I. The data sources, key proxy variables in the regression analysis and the regression findings are discussed in section II. Section III is a summary of the main findings.

Theories of Teacher Mobility.

Abstract: : The mobility of teachers among schools, among school districts, and between the school sector and other sectors of the economy can be fully understood only by unraveling a complicated web of social, psychological, economic, and purely random components. Any theory so extravagant as to attempt a complete explanation of teacher mobility would possess a structure as complicated as the phenomena to be understood. However, an extremely simple theory with a parsimonious structure would probably yield an inadequate explanation of teacher mobility. The framework presented aims at a balance between simplicity of structure and power of explanation by bringing to bear the work of economists on human capital, internal labor markets, and Markov models.

Capital-Labor Substitution and Technical Progress in Planned and Market Oriented Economies: A Comparative Study

Abstract: Many economists have attempted to measure aggregate growth performance of various economic systems. Empirical studies on this topic dealt primarily with measurement of gross national product and its main components for different countries. In one of his pioneering works Kuznets [11] presented the aggregate and per capita GNP levels and the rates of growth of these indices for various countries. While such estimates of rates of growth of GNP are interesting in themselves, the contributions of Solow [14] and Denison [5] stimulated interest among economists concerning the question of why these growth rates differ. The literature on economic growth and development cites differences in the initial conditions as a major cause for the differences in the rates of growth of the developed and underdeveloped nations. Another argument attributes differences in growth rates to differences in the quality of physical capital and technologies used in production. The human capital literature claims that different growth rates arise due to differences in the quality of labor which depends on such factors as education, health, age, sex composition, etc. In recent years, some monetary economists, e.g. Nadiri [13], have suggested that money ought to be treated as an additional factor of production. Hence one may argue that differences in growth rates are due to different degrees of monetization. Comparative systems literature would argue that growth differentials are due to differences in patterns of organization of the economic activity. In our study we are interested in comparing the growth performance of countries characterized predominantly by centralized socialist economic planning vs. countries with decentralized decision making and with a predominant private sector. The comparison of growth performances of the present study is based on the estimated structural parameters of production for the manufacturing sectors of various countries. The production structure for the manufacturing sector in each of the countries under investigation is assumed to be of CES form of Arrow et al. [1] with Hicks neutral technical progress. Handicapped by the quality of the available data, we have limited our investigation to cover only six countries: USSR, Hungary, and Yugoslavia -in the first category; and USA, Canada, and Israel-in the second one. In a similar attempt, Balassa and Bertrand [2] tried to compare the growth performance of a wider variety of countries. They have used primarily, however, unpublished data that we could not obtain and whose quality we could not have judged. This was, furthermore, coupled with highly deficient assumptions that we will comment upon in the next section. In the following section a unified treatment of the various explanatory factors of growth differentials is provided. Section III outlines our approach and presents the cross differences in rates of technical progress with other parameters of the production * We are greatly indebted to our colleague James Gapinski for his comments and suggestions. The authors alone are responsible for any errors. This research was supported in part by a Summer Research Grant to the first author by the Florida State University. P. Hanumantha Rayappa assisted us in carrying out the computational work reported in Section III. 103

The scope for labor capital substitution in the developing economies of Southeast and East Asia : a sectoral approach

Abstract: Hypotheses explaining an alleged failure of production techniques to adapt to social factor prices are examined. Research and policy priorities in Southeast and East Asian countries have a broad spectrum of experience in labor capital substitutions ranging from a high degree of adaptation in outward oriented economies to capital-intensive manufacturing enclaves in import substitution oriented countries. Manufacturing has attracted the most attention to labor capital substitution opportunities because it is the first sector in which capital intensiveness becomes evident. On the theoretical side, aggregative two-factor growth models must be broadened if they are to account for social factor pricing. Technological change has to be understood, administrative capability has to be considered, capital and labor must be broken down to their non-homogeneous components, and intersectoral relationship must be addressed if meaningful hypothesis are to be tested. The contrasting experience of balanced growth countries and those with industrial import replacement confirms that factor prices and the sectoral and product mix are critical to the choice of appropriate technology.

A Note on Barlow's Local School Finance

Abstract: In a recent article in this Journal, Barlow asks the following question regarding the financing of education through property taxation: "Is the particular level of spending associated with the property tax allocatively efficient? In other words, when local revenues are obtained through property taxation, are local school expenditures carried to the point where the marginal social benefit of public education equals its marginal social cost?" (Barlow 1970, p. 1028). His answer to this question is "that the level of aggregate school spending associated with property taxation must be judged inadequate, even when the benefits exported from the local district are ignored" (Barlow 1970, p. 1028). However, it is our contention that this conclusion reached by Barlow is not necessarily true because of the inappropriateness of the model upon which his analysis is based. In his theoretical analysis of the efficient level of educational output, Barlow vertically adds the demand curves of his three voters in order to derive the social demand curve for education. This analysis, therefore, assumes that education is what has been generally termed a "polar" public good. Such an assumption ignores a large body of literature related to the economics of education.' Research concerning the concept of human capital emphasizes that the product of educational institutions2 has, in addition to its social aspects, a private component, with the benefits of education accruing privately to individuals consisting of future earnings and also future nonpecuniary satisfactions. In fact, as stated by Benson (1961, p. 94), "the element of individual benefit is strong in the case of education stronger, probably, than is the case in most publicly financed activities." As suggested by AiIusgrave (1969, pp. 139-42), it would be much more realistic to consider educational services as a good which produces two types of benefits, one of which is private and contributes only to own consumption and the other of which is social in nature.

Human capital in southern migration

Abstract: This paper assesses the effects of interregional migration on the humancapital stock of the South. Data from the 1 percent sample maintained by the Social Security Administration are used to estimate the earnings level of in- and out-migrants for the period 1960-66, during which the South lost just under 1 percent of its labor force. When earnings of migrants are converted to human-capital values, the South is estimated to have gained human capital through migration. The gain, however, depends critically on earnings levels of migrants, and the paper demonstrates that the gain turns into a loss if migrants were assumed to receive earnings prevailing for nonmigrants in the region.

Financing the Generation of New Science and Technology

Abstract: Science and technology represent one of the most important sources of economic growth, together with the accumulation of capital and the formation of human capital. Their generation may even be considered a prerequisite for the application of other factors of growth, since science and technology affect not only the technological processes involved but also the possible objectives of production to be realised by factor input.

African Manpower Problems and Advanced Countries

Abstract: The dimensions of manpower needs of the African economy were little understood at the attainment of national political independence After the first flush of enthusiasm at achieving national freedom however, it became evident to the Africans that independence was just the first step on the road to a higher standard of living; that the management and direction of their resources through meaningful economic and political participation called for changed techniques and new responsibilities, and that the fuller and richer development of their human resources rather than mere political propaganda was the expectation of the people The old school of thought with regard to the methods of rapid economic development still persists in spite of the lapse of some two hundred years when Adam Smith and Marshall called the world's attention to the benefits of human capital formation Advanced countries, therefore, believing in the abundance of labour, devoted their energies to pouring millions of non-human capital to serve as the level for African development And where the money did not disappear into the pockets of a few politicians, the donors acquiesced in its investment in prestigious structures and the development of "pockets of affluence", or an "urban elite"1 African international trade relations are still meant to satisfy the export and import requirements of advanced countries, with the result that the capital and technical know-how, which flow to these countries, still bear the stamp of the industrial countries While it means an easy marketing of the advanced countries' goods and services, the overall effect is to drain the scarce capital in the land to the disadvantage of the major economic potential namely African manpower2 Signs of this mistake become evident when the neglected millions use their last weapon political and social disturbances The investing countries counter by talking about the